>The US Department of Labor’s Employee Benefits
Security Administration (EBSA) issued an advisory opinion
approving use of the “profile” mutual fund prospectuses for
use with participants who make their own fund choices.

“It is the view of the (DoL) that, under
404(c)
regulations, the term ‘prospectus’ includes a
profile,” wrote Louis Campagna, chief of the Division of
Fiduciary Interpretations. “The (DoL) believes that the
delivery of a profile by an identified plan fiduciary or
designee to plan participants or beneficiaries satisfies
the requirements of the 404(c) regulations because it
provides a clear summary of key information about a mutual
fund that is useful to such participants and
beneficiaries.”

>Ann Combs, assistant secretary for EBSA, said in a
statement announcing the advisory opinion’s release that
the shorter summary “fact sheets” are good because they may
encourage K plan investors to go through the provided
material before choosing their funds.

“The availability of profile prospectuses to section 404
(c) participants will make it more likely that potential
investors will actually read about the funds in which they
invest and will lead to more informed investment decisions
by plan participants,” said Combs.

>The rules governing the format and content of
“profile” prospectuses are laid out by the US Securities
and Exchange Commission.
In general, a profile prospectus is intended to provide
investors with clear and concise information about mutual
funds in a format that is designed to communicate
information effectively, while avoiding the often confusing
technical and legal terms generally associated with the
traditional prospectus, the EBSA said.

>However, the opinion said plan sponsors are still
required to hand over the more detailed formal prospectus
if participants request it.